So far the majority of you are incorrect.
420's origin IS known.
the term 420 originated at San Rafael High School, in 1971, among a group of about a dozen pot-smoking wiseacres who called themselves the Waldos, who are now pushing 50. The term was shorthand for the time of day the group would meet, at the campus statue of Louis Pasteur, to smoke pot. Intent on developing their own discreet language, they made 420 code for a time to get high, and its use spread among members of an entire generation.
So there ya go, someone's parents out there invented the term 4/20.
And remember this:
There are NOT 420 chemicals in Weed. It's about 315, the num. goes up or down depending on what you're smoking.
4/20 is NOT police code or Maryjane.
And that whole shit about Holland and 4/20 over there being "tea time" for smokers isn't true either.

420, indeed, was thought of years ago as the time of day some people got together to smoke pot. Now it is used as code for "Let's go get high." Also, some people consider it to be April 20th that is "National Pot Smoking Day."
I prefer all of the above.

To add to the definition regarding "The Waldos," I'd like to note that in an article of High Times containing an interview with the waldos, one of them told this story:
We had heard rumors that one of the members brothers had planted a pot patch in the wooded area around town. We all wanted to go look for this patch of weed, so we devised to meet eachother by the statue of Louis Pasteur after school. Since we all had after school activities or electives that lasted about fifty minutes, and since it took about ten minutes to get from school to our after school activities, and another ten minutes to walk from the activites to the statue. Since there were many of us we decided that 420 would be a good time to meet so we could go search for the patch of pot. We never did find it, but we had lots of fun getting high while trying to look for it.

Therefore, when they were at school, when they saw eachother between classes they would secretively say "420" and maybe give the thumb-and-pointer-finger-to-the-mouth sign to indicate that that was when they would meet to look for the weed patch. Since the waldos were such legendary potheads, when people who were not waldos saw this, it caught on and they assumed it was a secret code word for pot.

Supposedly "420" was a code used by the San Rafael police department, however, the department has always denied this. A group known as the "Waldos" claim to have originated 420 in San Rafael in 1971. The group met every day at 4:20 PM after school and eventually began to use 420 as a code for marijuana so they could talk about pot in front of parents and teachers.

The term 420 is used widely in Cannabis culture as a time to get high, a national day to get high, and cannabis itself.

There are a lot of different theories about how the word was first invented:

:: San Rafael theroy ::
In the early 1970's, a group of teenagers who attended San Rafael High School in San Rafael, California used to get high every day at 4:20 in the afternoon under the Louis Pasteur statue.

:: Highway 420 ::
In Ontario, Canada in the 60's, marijuana grew freely on one of the Highways. This highway was later renamed in 1972 as Highway 420.

:: The Date 4/20 ::
April 20th is coincidentally (or not..) the birthday of Adolf Hitler who was born on April 20, 1889. It is also interesting to note that the Columbine High School shootings also occured on this date in 1999.

There are many other theories that have been debunked such as the Bob Marley theroy and the Police Code theroy.